Thread: Technical v. Market Grading

There seems to be some disagreement when it comes to grading coins when it comes to the true (technical) grade of a coin and the market grading employed by TPGs. It seems that the more seasoned collectors will give a grade based on strike, wear and contact marks. This method can be used on every coin that was die struck. On the other hand Market grading is somewhat forgiving of certain criteria that would otherwise lower the value of a coin. This grading changes with different series of coins, particularly when it comes to higher value coins.

For years, I trusted the grades of TPGs. After all, if I wasn't in love with the coin, the grade would stand and the coin would be easily marketable. These days, I almost prefer to buy raw coins and trust my own grade because the grade on the slab has become less and less accepted. Early on with PCGS and NGC, the grading was strict and you could argue too strict. Today, it seems like the opposite, I see MS-66s that would have had a hard time getting a MS-64 twenty years ago. Why have the standards changed? Wouldn't it be nice if all slabbed coins looked as nice as their old rattler counterparts. I thought the idea of sight unseen marketability was the goal of TPGs. If not, what is point of them at all. Maybe, I'm just old school.

I see very little difference between coins slabbed today and those graded 10-20 years ago.

Originally Posted by Lehigh96

I see very little difference between coins slabbed today and those graded 10-20 years ago.

That very little difference could be worth tens of thousands of dollars in some cases. That is why it is so important for standards to stay the same. Why do you think that so many of those coins in old slabs have been cracked out for resubmission?

I think you are confusing this forum, and a faction who posts their negative opinion of TPGs here very often, with the market in general.

Said a bit differently, try and sell your raw coins and your graded coins then compare your results and I think your tune will change....Mike

Originally Posted by Kirkuleez

That very little difference could be worth tens of thousands of dollars in some cases. That is why it is so important for standards to stay the same. Why do you think that so many of those coins in old slabs have been cracked out for resubmission?

My opinion is that there has been no intentional change in grading standards and that gradeflation is the result of the subjectivity inherent in the grading process. I have seen hundreds of NGC no line fatties and PCGS OGH's/rattlers and they did not immediately strike me as PQ for the grade. In my experience, most of them were, and still are accurately graded. There have been some subtle changes in grading over the years such as allowing roll friction on MS coins, value grading of toned coins, and a few others, but otherwise grading standards have remained consistent in my eyes.

Originally Posted by Kirkuleez

Why have the standards changed?

Read PCGS's Grading Standards.

http://www.pcgs.com/grades.html

Read them carefully and take note that only "generailzed" terms are used. Interpretive terms if you will.
For example:

MS64 - Few marks/hairlines or a couple of severe ones, strike should be average or above
MS65 - Minor marks/hairlines though none in focal areas, above average strike

Technically - Define an "absolute" difference between the two grades.
Whats the technical doifference between "few" and "minor"? The only absolute difference that I can see is "none in focal areas" although even that is an interpretive phrase in that different folks focus on differen parts of coins. Some focus on cheeks while other focus on fields.

What about:

MS65 - Minor marks/hairlines though none in focal areas, above average strike
MS66 - Few minor marks/hairlines not in focal areas, good strike

Again, few vs minor but there's also a trade off. Above Average Strike for the 65 but only a "good" strike for the 66? Average or above average strike for a 64 but only a good strike for a 66?


Grading has ALWAYS been about the market and what folks will pay. The Sheldon scale, which is the basis for the numerical grades, was based upon that fact that someone, in theory, would pay 70 times the amount for the same coin in basal state. (MS70 vs P01)

Has grading changed? Sure. But, I believe that its changed because more coins have been graded and coins themselves have changed. How could you possible relate a low profile modern Lincoln as an MS66 against a high profile classic Lincoln design in MS66?


Those coins that were 66's 10 years ago are quite possibly 67's by todays acceptible grading scale because that scale has a built in flexibility called .................the market place.

I personally think the TPG's are both technical and market graders and dealers with raw coins do more straight market grading. Here's why...
Technical grading as I understand the definition has always been precise,detailed, to the letter grading. Market grading deals in wide range generalities (UNC, Circulated, Gem, Choice UNC, Proof,XF, F etc.) and eye appeal to sell the buyer on the coin. For example a dealer has a Unc obv. and AU rev. coin he market grades it as a low end Unc. or "slider" to maximize profits from it. A grading company will say net grade of the two sides and the coin gets an AU grade. Thus elminating the possibility of someone paying UNC price. Example two most dealers deal in absolutes. The coin is UNC or circulated. Many can't and most won't spend the time trying to decifer a MS67 from a MS68 or a Red from a red-brown. Dealing with circulated that have set wear points and patterns that can easily be follow/identified however even here most dealers won't say XF-35,40 or 45 it's straight XF only. Grading services whether right or wrong in grading do the exact detail grading of both unc and circ. Next point that ties into the previous point is all dealers have a cheat sheet system when it comes to grades. They know that all "new modern" (1975-2012) coinage the average grade to come out is PF69 and MS64/65, MS62/63 for roll issue. When the newest minting technology came to be with quality control getting tougher and tougher. "Modern" coinage (1950-1974) was the next best technology mixed with a newly invented idea of quality control. Average grade PF63, MS63 with roll issue being so low it's just an unc. All groups of coins are priced accordingly. Anything before 1950 mostly gets sold UNC (MS60) or circ. unless it's an expensive coin that could bring big premium in MS64 or higher vs. MS62 or 63. That's the only time a dealer will do the extra work for an exact MS grade. Morgans, halves, rare in MS and type coins come to mind. TPG's do any and all coins to exact technical grade detail. That being said I do agree that TPG's do market grade but only when you get into those coins that are rare in MS or even in high grade that they don't have experience dealing with or grading them or there aren't enought examples and known about the coins to compare them to. How many MS 66 red 1909 VDB-S's has anyone seen, graded or compared? How many 16-D merc dimes in MS63 or 62 even? I also think TPG's market grade when you start getting into subjective portions of grading such as +/- for eye appeal, star designations for toning, SP's, vapor finishes on 5oz coins. Things of that nature. That's my take on it.

Sorry I forgot this case in point I have a MS67-6FS nickel that has a die deterioration mark across the bottom step. To me that would have and should have excluded the coin from being a full step even a 5 step. The TPG did not feel it a big enough deal or dropped the ball on it entirely. That being said the coin is still a MS67 just the subjective and market grading superlative of FS is potentially wrongly applied.

Originally Posted by Lehigh96

I see very little difference between coins slabbed today and those graded 10-20 years ago.

Ah - I think they have significantly changed.

Originally Posted by areich

Ah - I think they have significantly changed.

Prove it!

If grading standards have changed significantly over the last 20 years then that means that we should be able to discern which coins were graded during which era without seeing the labels. The last year of the no line fattie holders was 1995. Before that date, most people claim that the TPG's were rather conservative and much discussion takes place about the inherent value of the NGC fatties and PCGS OGH's and Rattlers. After 1995, people claim that the standards loosened and to my knowledge the collecting community considers the 5 years preceeding the inception of the CAC to be the most liberal grading era. So let's have some fun here.

I am going to post photos of a group of NGC MS65 Morgan Dollars with the grade span of 1992 to 2008. After looking at each photo, please assign the appropriate slab generation to each photo. The slab generation choices are as follows:

NGC 5 (1992-1995)
NGC 6 (1996)
NGC 9 (2001-2003)
NGC 17 (2004-2008)

Here we go!

1)


2)


3)


4)


5)


6)


7)


8)



And before everyone starts to complain that this is rigged and that I cherrypicked the examples, I promise you that I can show you other NGC MS65's that are both better and worse than all of the examples in this thread. Furthermore, every coin was photographed by me using the exact same lighting set up so there is consistency in the photos.

Good luck everybody, and hopefully someone will surprise me by admitting that they really can't tell.

sight unseen marketability will never be seen with the TPGs. Coin grading is subjective and there is no such thing as a standard grade. It always depends on some subjective factors. As long as anything subjective comes into play, sight unseen goes out the window.

Thanks for those Morgan images, Lehigh. All nice gems. I don't think there has been much change in grading standards for those as they are the most common and popular collector coins.

As for the OP's question, I find that NGC is more the technical grader vs. PCGS; arguments can be made to back up why any given coin is deserving of a particular grade.

Here is what NGC's head had to say as to the basis of their grading:

"MR: It bothers me that some good folks have a very bad experience trusting grading services and coin dealers when they realize that their supposedly well-selected coins are really very low-end or overgraded, worth well below bid
levels. They bought into the promises of slabbing only to become its victims. How do you respond?

"MS: NGC doesn’t price coins in the market and we’re not communicating the merits of an individual coin directly to a buyer. Neither do we buy or sell coins. Were simply describing their condition, and by doing so independently, collectors are much more victors than victims. Over time there also have been factors that effected the perception of grading. Some say it’s gradeflation but I call most of it a learning curve. ...........



http://www.ngccoin.com/news/viewarti...IDArticle=2259

Thank you for your comments, I expected a spirited debate. I would add that I do have plenty of great things to say about PCGS and NGC. I think that their standards are still pretty good and I have total faith in their counterfeit and doctoring detection. That being said, my experience is that the overall standards have been loosened a bit. I understand that there are many slabbed coins from every era that have an argument of over and under grading.

Lehigh96, I can't possibly guess what generation slab those lovely Morgans came from. Instead, I will give you the grade that I would apply to the coin if I were interested in buying it and what was my determining factors. You can let me know if there is any correlation to the slabs.

1) MS-64 Due to a few contact marks in the fields and a rather weak obverse strike.

2) MS-65 Lovely clean fields and only light contact marks. I can't really determine the luster from the image, but I suspect it is quite nice and pushing the 66 mark.

3) MS-64 I'm sure the color is a bit more appealing in hand, but the broken look is distracting to me. It makes it a bit tough to see contact marks.

4) MS-65+ Beautiful clean surfaces and a nice strike.

5) MS-64 Way too many contact marks for the 65 grade for me, but the luster looks striking.

6) MS-64+ Amazing eye appeal and a nice strike. A few too many contact marks for the 65 grade.

7) MS-66 A beautiful strike and nice eye appeal. Very few light contact marks.

8) MS-64 Large obverse contact marks preclude it from the 65 grade.

Originally Posted by Kirkuleez

Thank you for your comments, I expected a spirited debate. .........

Well, I figure I got lucky. What has already been posted saved me about 2 hours worth of typing. Many thanks for that Owle !

I will say this, I believe that most people do not understand the difference between market grading and technical grading. And I may yet chime in on that.